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TREASURIES-Yields edge higher after solid U.S. data
November 30, 2017 / 4:02 PM / 16 days ago

TREASURIES-Yields edge higher after solid U.S. data

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Nov 30 (Reuters) - U.S. Treasury yields drifted
higher on Thursday after U.S. data showed a rise in inflation
and a decline in initial jobless claims, reinforcing
expectations of an interest rate increase next month and several
more in 2018.
    Yields on U.S. 10-year and 30-year Treasuries climbed to
two-week peaks amid a generally healthy risk appetite, with most
global equity markets trading higher. Those gains held up
following the release of U.S. data. 
    The Federal Reserve's preferred inflation measure, the
personal consumption expenditures (PCE) price index excluding
food and energy, rose 0.2 percent in October after a similar
gain in September. The so-called core PCE increased 1.4 percent
in the 12 months through October, matching September's rise.    

    U.S. consumer spending, however, slowed in October. 
    Jim Vogel, interest rates strategist at FTN Financial in
Memphis, said the market was focused on inflation and not really
looking at consumer spending.
    "Today's inflation data was enough to let bond yields drift
back up to the highs at the long end of the curve," Vogel said.
    "A lot of people have moved their forecasts to four rate
hikes next year, from three. But the people who are skeptical
about the four hikes in 2018 and who saw the data this morning
may be thinking that is not totally out of bounds," he added.
    The Fed is widely expected to raise rates at next month's
monetary policy meeting and has forecast three more rate hikes
next year. 
    U.S. initial jobless claims slipped to a seasonally adjusted
238,000 for the week ended Nov. 25. Last week marked the 143rd
straight week that claims remained below the 300,000 threshold,
which is associated with a strong labor market.
    U.S. yields had briefly inched lower after a Chicago
manufacturing index fell to 63.9 in November from 66.2 the
previous month. Last month's reading was the highest since March
2011. 
    In late morning trading, the 10-year Treasury yield
 was up at 2.386 percent, from 2.376 percent late on
Wednesday. It hit a two-week high of 2.401 percent earlier in
the session.
    U.S. two-year yields, which hit a nine-year peak
last week, were at 1.766 percent from 1.762 percent on
Wednesday. Two-year notes are the maturity most sensitive to
rate hike expectations.
    U.S. 30-year bond yields were up at 2.826
percent from Wednesday's 2.817 percent. Earlier, 30-year yields
hit a two-week high of 2.844 percent.
    
      November 30 Thursday 10:44AM New York / 1544 GMT
                               Price                  
 US T BONDS DEC7               153-2/32     -0-8/32   
 10YR TNotes DEC7              124-148/256  -0-36/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.2675       1.2892    0.000
 Six-month bills               1.415        1.4449    -0.008
 Two-year note                 99-248/256   1.766     0.004
 Three-year note               99-166/256   1.8727    0.014
 Five-year note                99-124/256   2.1092    0.016
 Seven-year note               98-248/256   2.2853    0.017
 10-year note                  98-200/256   2.3882    0.012
 30-year bond                  98-120/256   2.8261    0.009
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        18.75         1.00    
 spread                                               
 U.S. 3-year dollar swap        18.25         0.50    
 spread                                               
 U.S. 5-year dollar swap         6.50         0.25    
 spread                                               
 U.S. 10-year dollar swap       -0.50         0.75    
 spread                                               
 U.S. 30-year dollar swap      -23.50         0.25    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Meredith
Mazzilli)
  

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